Youth unemployment in Singapore: An overview

The secrets behind Singapore’s low youth unemployment are its ability-driven education, centrally planned manpower and social benefits tied to employment. But can it last under the pressure of an ageing population and rising unemployment in neighboring areas? By international standards, Singapore’s youth unemployment level can be considered low. In 2011, the annual average unemployment rate

The secrets behind Singapore’s low youth unemployment are its ability-driven education, centrally planned manpower and social benefits tied to employment. But can it last under the pressure of an ageing population and rising unemployment in neighboring areas?

By international standards, Singapore’s youth unemployment level can be considered low. In 2011, the annual average unemployment rate for residents aged 15 to 24 was 6.7%; this is almost half of the global average of 12.6% that very year (ILO, 2012).

Youth unemployment in Singapore has also been characterised as “transitional” and the Ministry of Manpower claims that this group of young job seekers in Singapore generally do not experience long unemployment spells with no more than 7.7% of youths looking for work for at least 25 weeks (Daipi, 2012). Against the backdrop of a global youth unemployment crisis, it is somewhat interesting that this 5.2 million-strong state, strongly plugged into the global economy, has managed to institute seemingly robust mechanisms to keep the youth employment situation in check.

This article discusses some of the reasons that could contribute to this favourable labour market outcome, but does not feign to be able to provide an exhaustive commentary. For the complex matter of employment is determined by multifarious factors and cannot simply be addressed in one account. I will, instead, focus this discussion by first teasing out supply-side explanations, with a backgrounder on the education and training systems of Singapore; second, discuss certain key institutional characteristics of the labour market that play a part in shaping outcomes. And third but not least important, highlight ongoing processes that could test and challenge the resilience of the city-state’s youth (un)employment situation.

Supply-side explanations

Although the youth unemployment rate in Singapore has increased from 1992 to 2011, it has remained below the 10 per cent mark (see Figure 1). The peaks in the unemployment rate that took place in 1999, 2003 and 2009 – as highlighted in the graph below – could correspond to the impact on labour markets after the Asian financial crisis of 1998, SARS outbreak of 2003 and the global recession of 2008 respectively. External shocks to the local labour market aside, the unemployment rate, as seen over time, has hovered around a manageable level.

Often, the education system in Singapore is attributed as the cog in the state machinery that prepares well and supplies adequately a harvest of graduates into the labour market each year. This section discusses some of the key attributes of education in Singapore as related to youth employment: from streaming, to technical vocational education as well as the increasing consumption of tertiary and higher education.

Youth unemployment rate in Singapore (1992 – 2011)
Source: Labour Force Surveys, Ministry of Manpower (Note: LFS were not conducted in 1995 due to the conduct of the General Household Survey)

Streaming and ability-driven education

Streaming, or tracking is a visible trait of the Singapore education system. Streaming means placing students in the same group with others with comparable skills. In other words students are separated into different groups based on academic performance.

To be sure, the system has seen rapid evolution over the past fifty years from the “survival-driven phase” (1965–1978) – following Singapore’s independence from British colonial rule where national integration through a national education system was seen as the key condition for economic survival (Goh & Gopinathan, 2008) – to the “efficiency-driven phase” (1979–1996) where the aim was to reduce “educational wastage” by streaming students (Lee et al., 2008). It was during the “ability-driven” phase (1997–present) that reforms were made to the controversial streaming practice.

The “ability-driven education” (ABE) of today would, according to leaders of the National Institute of Education, “give all youth 10 years of general education, including six years of compulsory education at the primary level, during which they could participate in a variety of programs according to their ability… The school system features a national curriculum, with major national examinations at the end of the primary, secondary, and junior college years.” (Lee et al. 2008, p. 30). Figure 2 depicts the various streams and tracks available within the Singaporean education system.

The boons and banes of ability-driven education have already been earlier discussed (cf. Tan 2005, 2008; Tan, 2011). Proponents of the Singaporean education prototype have advocated that its advantages include learning tailored to the child’s abilities and needs due to the separation of the academically inclined from the vocationally inclined.

Accordingly, young people are trained with different sets of skills and channelled into different segments of the workforce. Coupled with a history of central manpower planning in Singapore that hinges on the close collaboration between the ministries of education, manpower and trade, these policies have allowed for the government to ensure that workforce demands are met with optimum levels of workers supply. Although ABE is built on attempts to change traditions of tight teacher control around highly structured curricula and pedagogies towards the “production” of creative Singaporeans adapted to the globalised knowledge economy (Ozga & Lingard, 2007), the student is subjected to high-stake examinations that can very early on in their life-course determine their life chances and life choices.

Technical and Vocational Education & Training (TVET)

Despite the contentions on the pros and cons of “ability-driven” education, this educational strategy and the corresponding tactics for skills training have been attributed as beneficial for ensuring young people in Singapore find work when it is time to. In particular, a big proportion of young people are funnelled annually into the Technical and Vocational Education & Training (TVET) system with over 40% of each cohort enrolled in the Polytechnics and about 25% in the Institute of Technical Education (ITE) (Teo, 2012). This 25 percent of a school cohort tend to be those with lower academic abilities as assessed through high-stake examinations. These students would then take fewer academic subjects in school through a differentiated curriculum (Law, 2008, p. 124).

In Singapore, this latter stream refers to a vocationally oriented technical education aimed at equipping graduates with the necessary occupational skills and standards for the industry and economy i.e. the focus is to train technicians and skilled personnel (Law, 2008).

These institutions have by and large been praised as strong models of pre-employment training (cf. Almeida, 2012, p. 21; Ashton et al. 2002). Such messaging is reinforced in political discourse and the TVET system has been attributed to keeping Singapore’s youth unemployment rate low, relative to other parts of the world (cf. Teo, 2012). The quality of Polytechnic education is said to reside in the features such as industry focus; application and development-oriented training; practice-oriented training; balance between broad-based foundation and specializations; and industrial attachment programmes for students (Chan, 2008, p. 139).

Accomplishments aside, the employment and “employability” of graduates from the TVET system may seem to be what matters more in a discussion like this. In 2009, more than 82% of students from the Institutes of Technical Education completed their training and were placed in jobs (OECD, 2010).

While not an insignificant level, it is necessary to highlight the wage disparity between those who undergo vocational training and those who obtain higher education qualifications as there is a clear premium on higher education in Singapore.

Figures from the 2011 Wage Report published by the Ministry of Manpower state that University graduates had a median monthly starting pay of $3,000, while that of Polytechnic and ITE fresh graduates were $1,850 and $1,300 respectively (MOM, 2011a). In a study by Low and colleagues (2004), their analysis revealed that a worker who invests in an additional year of education is expected to increase his earnings by 13.2%.

Similarly, findings from Yong and colleagues’ (2007) yielded consistent results and the rate of return for schooling tends to be higher for tertiary education (i.e., diploma and above) as compared to non-tertiary education. The authors concluded that there was a clear lack of improvement in returns to secondary and below education levels (Yong et al., 2007).

The above discussion is not to discount the pivotal role TVET has played in Singapore. Nonetheless, the discussion permits us to peek beneath the veneer of these institutions’ achievements to examine whether the labour market has indeed kept up with recognising, in pecuniary terms, the skills of these aspiring technicians and skilled personnel. Since there have been high returns to education in Singapore, graduates from Polytechnics and ITE are thence compelled to continue in their learning journeys, as we shall discuss in the succeeding sections.

Hitherto, we have discussed aspects of pre-employment training (PET) in Singapore. In addition to formal learning that takes place under this system, there is also Continuing Education and Training, commonly abbreviated as CET. In 2003, a national body to oversee workforce training – the Workforce Development Agency – was set up, and from 2005 the Workforce Skills Qualifications (WSQ) frameworks were developed and implemented. The financial crisis of 2008 gave the WSQ system and CET in Singapore a push forward when the government pumped SGD 600 million of funding into the Skills Programme for Upgrading and Resilience (SPUR), a two-year programme from November 2008 to November 2010 to help companies and workers manage the economic downturn and invest in skills for the recovery (WDA, 2008).

In fact, the tactic of helping companies to manage excess manpower and reduce retrenchment, as well as to encourage local workers (including those retrenched) to upgrade their skills and convert to new jobs is reminiscent of certain elements of the Swedish Rehn-Meidner (R-M) model. Increased expenditure on active labour market policy as observed in the mid-1970s in Sweden was first concentrated on measures to maintain labour demand from enterprises in order to avoid dismissals, and to mainly support building up inventory and subsidies to in-house company training (Erixon, 2010, p. 686).

As of 2011, there are 30 Singapore Workforce Skills Qualifications frameworks. For each framework, Industry Skills and Training Councils drive the development and validation of skills standards, assessment strategies and training curriculum for the industry. Because this form of institutionalised training is entirely work-related, CET typically caters to those aged 18 and above. Later on in this article, the issue of the alignment between the PET and CET systems and recognition of prior learning will be discussed. This alignment is of importance to youths as they traverse through their educational and career trajectories and partake of formal learning via these two systems.

Increasing levels of consumption for tertiary and higher education

A straightforward explanation to why youth unemployment is low in Singapore can be easily linked to the fact that youth labour force participation is shrinking while the level of consumption for tertiary education is increasing simultaneously. Some descriptive statistics can facilitate to demonstrate this pattern. From 1991 to 2009, the proportion of youth participating in the labour force fell from 55% to 36% even though the youth population rose from 452,900 to 504,600 (MOM, 2011b). At the same time, as we can see from Figure 3, there is a marked increase in the enrolment of young people in tertiary education.

Enrolment in tertiary education, Singapore, 2001 – 2011, Source: Yearbook of Statistics Singapore, 2012 (Department of Statistics), compiled by author. (Note: The Singapore government does not provide Figures for Singaporean students studying overseas, but these figures are important to consider, as the numbers are not small. In 2009, UNESCO reported that there were 19,633 Singaporeans studying overseas. (Davie, 2012).

University figures in this graph include undergraduate (full-time, part-time) and postgraduate (no disaggregated figures provided). Figures provided by the Ministry also do not distinguish Singaporean from non-Singaporean students. In reading these figures, it is necessary to consider the increasing intake of international students, particularly within institutes of higher learning. Yet, it can be confidently stated that more Singaporean youth are postponing entry into work and staying in education (cf. MOM 2011b).

If one follows the shortest route to obtaining a University education in Singapore (refer back to educational pathways in Figure 2), female students could graduate with a Bachelors degree at age 22 or 23, and males will graduate two years later because of compulsory two-year national conscription when they are 18. The age of youth joining the workforce in Singapore is thence relatively high. The intent of keeping young people longer in education and providing as many youth with post-secondary education is deliberate, in the case of Singapore.

Consequently, the country sees less early-school leavers, a smaller proportion of its youth “not in employment, education or training” (NEET, 2.2% in 2009 [MOM, 2011b]) and a delay or postponement of the typical age of entry in the labour market. Furthermore, the Ministry of Education plans to increase the number of students enrolling in Universities. They have pledged that the Government will increase the number of publicly-funded, full-time university places for Singaporeans so that this will raise the cohort participation rate to 40% by 2020, compared to the current rate of 27% (Ministry of Education, 2012). This means that more young people will potentially access and enrol in Universities, possibly further diminishing the proportion of youth participating in the labour force.

Despite decreasing numbers of youth in the workforce, labour market activity – particularly in the areas of retail, service and construction – is propped up by increasing foreign labour in Singapore. As of June 2012, more than one million individuals make up the foreign workforce (figures provided have excluded foreign domestic workers) (MOM, 2012b); this is approximately and proportionally 20% of the country’s population. The contribution of foreign workers to Singapore’s workforce has made it possible for the country to sustain growth and development whilst its youth keep out of the labour market and continue in higher levels of education. Albeit only touched on tangentially here, the issue of reliance on foreign labour will be addressed again in the concluding section.

Demand-side explanations: the Singapore labour market and its institutional characteristics

Besides establishing strong systems of education and training, central manpower planning in Singapore has been attributed as playing a key role in ensuring alignment between economic goals, priority industries, training of workforce as well as ensuring that youth find work when they start their job search.

As Chan (2008) informs, the number of students admitted each year to institutes of higher learning closely match the broad targets set by the National Manpower Council (NMC) that is chaired by the minister for manpower and that sets the direction for Singapore’s manpower planning (p. 135). These targets are based on the plans and projections provided by various economic development agencies and ministries and go right down to the details of the number, type, and level of manpower required by Singapore’s industries (ibid).

To illustrate the potential labour market outcome of this alignment, from the 2010 Graduate Employment Survey conducted by the Ministry of Education, it was reported that over 9 in 10 polytechnic and university graduates who entered the job market in 2010 were employed within six months. This attainment was happening alongside a Singapore where in the past few years more than 100,000 new jobs were created annually. Employment grew by 121,300 jobs in 2011, and 115,900 in 2010 (MOM, 2012a)

Although these celebrated figures appear impressive, getting a job does not necessitate that every graduate lands a ‘good’ job that matches their educational skills or a job that pays well, as earlier discussed in the section on wage disparity. Nevertheless for Singaporean youth, the impetus to get a job – whether ‘good’ or not – is high, because employment is intimately linked to contributions to one’s Central Provident Fund (CPF) account. The CPF scheme in Singapore, or a “social policy based on assets” (Sherraden et al., 1995), merges social and economic interests in an inextricable and pronounced way.

Briefly, how the CPF mechanism works is that both employers and employees pay into individual employee accounts during working years. Even though the CPF was originally intended as an old-age retirement scheme, its role was later extended to permit the withdrawal of savings for other purposes, the most important of which: the purchase of a home. Withdrawal is also now permitted to meet the costs of children’s higher education, one’s medical care and health insurance (Vasoo & Lee, 2001). Such a social policy thus compels Singaporeans to find work and stay in work.

Additionally and characteristically of its labour market policies, the Singapore government does not implement any unemployment benefits system; in their words, “instead of automatic unemployment benefits, we have automatic employment benefits” (Singapore Budget, 2011). Although, a potential explanation as to why youth might not want to stay in unemployment over prolonged periods due to the lack of a social safety net for the jobless, it is, alone, inadequate as a reason if the individual has strong parental financial support (a substitute for unemployment benefits). The impact of parental influence and resources on a young person’s employment and job search can cut both ways, and this we will explore below.

Attitudes towards unemployment – a cultural explanation?

In Singapore, it is not common for youth to move out of their parents’ home until they get married. In contemporary Singapore, it is difficult to pinpoint if this is solely due to a strong sense of interdependence within the family (where living with parents and siblings in an extended family is considered the societal norm), or if high property prices and housing policies reduce the efficacy of young adults to rent or purchase their own home.

Regardless of the reasons, because a big proportion of youth still reside with their parents, parental support and its effect on youth employment can move in two ways. On the one hand, unemployed youth do not necessarily have to face the anxiety of having to support themselves or pay for rent as they live with their parents. Further, unlike their counterparts in other societies where it might be deemed unacceptable to be living at home with one’s parents once you are of a certain age, there is no such stigmatisation in Singapore where co-residence is even encouraged under the pretext of filial piety.

On the other hand, because the unemployed youth have to share a living space with his or her parents, one’s unemployment becomes visible to the family. Working hard and performing well both in school and work are traits inculcated in Singaporeans since young. While there has not been a systematic study on public attitude towards unemployment, it can be adduced from societal norms and cultural expectations that prolonged unemployment is generally frowned upon. Living at home might also render the young person to more instances of nagging from their parents to find a job. This might thence deter young people from putting off finding work upon graduation.

Anticipated challenges for Singapore

Taken together, these supply-side descriptions, consideration of cultural factors as well as exploration of the institutional characteristics of this labour market culminate at providing some explanations for the low rate of youth unemployment in Singapore. It is perhaps also necessary at this point to consider the durability of this outcome and be attentive to ongoing trends that could present challenges for the Singapore labour market.

Matching expectations of upcoming generations of educated youth

In discussing the concept of the “opportunity trap”, Philip Brown argues that the growing importance attached to educational credentials symbolises a tightening bond between education, jobs and rewards and that “credentials are the currency of opportunity” (Brown, 2003, p. 3). This is certainly the case in Singapore where there is an increasing premium for educational credentials, as earlier discussed. Young people’s expectations of work and rewards will therefore increase as they amass educational credentials under “the more we learn the more we work” formulation (ibid). A resulting mismatch between expectations of young adults and actual opportunities available in the labour market could emerge, presenting domestic challenges where youth are picky about the types of work they do, desiring only to participate in work that pays well or is of acceptable status.

Compounded with threats of job polarisation in Singapore that squeezes (or hollows out) middle-skill jobs in Singapore and stagnate median wages a domestic challenge looms for the state to ensure that the upcoming generations of highly-educated youth with high expectations of salary and job satisfaction are appeased and satisfied.

Furthermore, with more young people in Singapore remaining within higher education juxtaposed against the realities of an aging population, an inherent tension that poses strain on the workforce persists: soon to be one of the demographically oldest countries in the world, there will be fewer working adults to look after more aged dependents (Lee, 2009). By 2050, the median age of Singapore’s population is projected to be 54, as compared to 36 years in 2009 (Lee, 2009).

At present, and as earlier presented, there is already a heavy reliance on foreign labour to take up places in low-skilled and low wage jobs. This reliance will persist in lieu of the evolving demographics of the population.

Regional youth unemployment and a post-crisis environment

Whilst Singapore has been able to boast low levels of youth unemployment, this labour market characteristic is not shared with other countries in the Southeast Asian (SEA) region. In 2011, the youth unemployment rate in SEA and the Pacific was 13.5% and in the medium term, upward pressures on youth unemployment rates are projected in the region (ILO, 2012). The severity of youth unemployment is very much pronounced in neighbouring countries such as Indonesia (22.2%) and Philippines (17.4%) (Figures reported by the United Nations Statistics Division in 2009).

Singapore, as part of the ASEAN community that is currently pursuing enhanced connectivity in the region, could see more young people moving out of countries with little job prospects to cities that promise opportunities – cities like Singapore. Such labour mobility within the region could potentially affect youth employment rates in Singapore as the strong inflow of both educated and skilled migrants into the country add to competition for wages and jobs. Additionally, in this post-crisis environment, will the effects of the recession hit later and present a hurdle for young people to find employment in their chosen fields, particularly as hiring intentions of managers and businesses continue to be driven by cautious optimism? (UNESCAP, 2012, p. 42) This is a pertinent question for Singapore especially since it is plugged into the global economy with over 7,000 multi-national companies (MNCs) operating in the city-state (MOM, 2012c).

Conclusion

The superimposition of Singapore’s low youth unemployment rate against the global youth unemployment crisis makes this city-state an apt setting to explore reasons for its more favourable labour market outcomes for young people. In particular, as this discussion has endeavoured to point towards, keeping the youth unemployment rate low has not been so much the focus of governmental policies as much as it has been a by-effect of policies to keep both youth and adults in Singapore employable or in employment.

The youth employment situation in Singapore has certainly showed an encouraging trend but institutions that train, educate and provide jobs for young people must ensure the mutability of their institutional characteristics to meet with evolving trends within the labour market. The increasing wage disparity between those with higher education and those without is potentially problematic and could impact on job satisfaction and provoke resentment amongst those without higher education.

A possible intervention for this problem could be better alignment between the systems of pre-employment training (PET) and continuing education and training (CET) so that young adults are able to go out to work and return back to CET later with their prior experience and qualifications recognised. The fluidity between the systems is of utmost importance in a climate where credentials and qualifications are accorded such high regard.

A question follows: can Singapore’s experience be distilled for lessons elsewhere?

Freeman (1998) stresses that borrowing features from one country and transplanting to another with the expectation that the unemployment rate will decline is precarious, since a particular institutional feature may perform differently depending on the overall institutional framework. Singapore is unique in that it is a small country with centralised governance, strong political and institutional will to keep employment levels high.

However as a case, it is interesting because not only is it located within a region that has relatively high levels of youth unemployment, its economy is open, vulnerable and susceptible to the volatility of global economic shocks and downturns. In teasing out the distinguishing factors and relating them, in combination, to the issues of youth unemployment, it is hoped that the model adopted by this city-state could provide one account vis-à-vis a bigger collective of diverse education and labour market experiences.

Ministry of Manpower (MOM) (2011b). Youths in the Labour Market. In National Youth Council (ed) YOUTH.sg: The State of Youth in Singapore 2010. Retrieved 25 November 2012, from http://www.mom.gov.sg/Publications/mrsd_youths_in_the_labour_market_09Nov11.pdf